Earnings Call: Q2 2020

Jul 14, 2020

So then I would like to welcome all of you to this quarter 2 presentation from AFRIC from Ophthari. My name is Yvonas Gustafsson. I'm the CEO of Avery, and we also have used Pionan, our CFO, who will participate and present a few slides to all of you. So again, very much welcome to this presentation. Let's jump into it, and I will start with the 3rd slide, which is the overview slide. And as you see, the headline, as we have chosen is a stable result in a challenging quarter because Before the quarter was challenging, you have seen that the top line of sales came in at SEK 4,800,000,000, which is minus 11% compared to the same period last year. With a lot of activities and a lot of cost mitigation activities, we were able to keep the margin at 8% equal to SEK383 1,000,000, we will cover a bit what we have done in mitigation activities on cost savings of course later in the presentation. And then you can see the 1st 6 months then, we are still on positive growth on 3%. EBITDA after 6 months, 8 58 and EBITDA margin after the 1st 6 months of 8.5%. But I have to say that that pretty fast decline that we had to absorb in the quarter was I don't think that this company has seen such a quick decline for many, many years. And it I think it was even 43% in the quarter. I think you all know the background to that as the large Swedish clients actually stopped the complete operations during the second quarter. And they also have announced layoff and they are overlooking their R and D portfolio, etcetera. So that was the single one most important segment where we saw a big decline But as we said, we saw a stable result due to with infrastructure processing this energy. Very positive is that the cash flow has been very strong during the quarter that enable us to strengthen the balance sheet and you also will cover that even more in detail. As a consequence but also starting with 4, we have started now really repositioning of the automotive segment to really see where will we play. So of course, we are now as a consequence of a large automotive client changing, but we also want to make our destiny in their own hands, so we are overlooking where do we want to play moving forward to make sure that we are positioning ourselves to the clients to provide long term value to move up in the value chain and deliver more product and value to our clients. We have seen end of the quarter, I would say, a slight recovery and stabilization in general, but of course, as you all know, there is a big certainty how the market will develop in remaining 2020, very much depending how the pandemic will develop. But if you ask, look on the business side, what we have seen, we have seen that during the quarter, we saw a recovery in end of the quarter, still uncertainty among others in the automotive segment. We took a lot of measures if you look on the slides saying extensive merchants in response to COVID-nineteen, starting up early in quarter 1, actually. And of course, we already had announced a cost saving program end of last year, a continuation of the program that we delivered last year with integration of OLFmpari. But what we had to do was very quickly to change the way of working, and that we talked about when we presented those quarter 1 that we actually, in 4 time period, could take some 17,000 employees, to working from home using digital flat forms, and it's been working very well. I'm very impressed how quickly our organization could respond to that. It shows also that we and our clients have a high digital kind of, maturity. And we have actually not only been able to have a lot of customer and client dialogue we have also been able to deliver commissioning work at Zetta by using digital platforms. We have had some 1900 employees on short term work, during the second quarter, very much driven from the automotive segment. From this 1900, we have we are in the process of laying off permanent some 200 employees as a consequence of the reduction we have seen in automotive. We, of course, we took a reduction on basically all cost spending. Some of them had been very natural like traveling and the exhibitions stuff like that. We are increasing the pace of the ongoing efficiency program that we already announced of SEK 120,000,000 But still now, we are focusing a lot of mitigating in the market turmoil, especially for example, in the Industrial segment. So the total cost that we reduced during the quarter with a mixture of short term and long term has been SEK 500,000,000, SEK 500,000,000, SEK 500,000,000, SEK 500,000,000 And of that, 87,000,000 was from the state subsidies to support our employees due to the Forecom work allowance. So that's an overview of the cost spending. You also will cover it a bit more, how it was affecting us. And this is basically what we saw then. We reduced the top line, if you look on Slide number 4, of some 11% reduction. And we could then, with all kinds of mitigation activities, reduce our cost base with SEK 500,000,000 roughly, which I think is a great achievement. And I'm very positive how our organization have reacted across, all divisions and all, countries that everybody was very quickly into driving actions both to serve our clients, but also to mitigate costs And I would say that the annuity and the momentum in our company, I would say is stronger than ever. So even though it's been a challenging quarter and quite least how the organization have responded to this challenge that we have had during the second quarter. Slide 5, the market update, I mean, of course, we saw the major impact of COVID-nineteen in the automotive segment. Of course, there was spread also broader, it was a lot, especially in the beginning of the quarter, with a lot of uncertainty in other segments as well. But I would say, automotive took the, took the immediate where, as you know, then the big license, we actually stopped their operation, the production, but also their kind of whole R and D operation for some weeks during the quarter. And now when getting back, our clients are really looking into the R and D what to continue to drive and they have announced layoffs. And of course, part of our portfolio to the lower end, more professional like, we have seen volume reductions, that that will remain. I will get back to that in a second. Infrastructure, I would say, continued strong. In the Nordics, really strong, and we seeing some more impact in Central Europe. In different segments, rail and road transport segments more on the public side, very strong, We have also seen that the facilities side has been quite okay, a bit more, I would say, impacted from the private side, but also here, we saw some, I would say, positive development during, the quarter, end of the quarter. So in general, I would say infrastructure segment, especially in the Nordics, holds up quite good. On industry and data solution, of course, now we are in-depth division very much impacted from the Automotive segment in Sweden, which is a huge segment and related supply chain and manufacturing structure. Here, we saw volume reductions during the second quarter. At the same time, I would like to highlight Food And Pharma, for the Pharma was a segment that went very well for us during the quarter. So there has been also bright spots in the Industrial segment in the Nordics during the second quarter. But again, it was kind of overshadowed with 40% reduction in 1 quarter in a big segment. Process industry solid demands. We could see, of course, that some decisions took some longer time But I would say on the CapEx side continues before maybe a bit more impacted on the OpEx side, but I would say strong stability in the process industry also driven from the fact that we have a world leading position, especially in pulp and paper. Stable demand in the energy business. And we could even note that there was some increased activity by end of the quarter And I also want to say that our repositioning work that we started within the Energy business, continued really according to plan. And I'm very pleased to see that, of course, we have a shrinking top line driven also from the fact that we have one EPC product last this year, and also the fact that we have started that repositioning. But when we see the margin development, and the way our end of the business is geared up towards kind of the future end market. I'm very pleased with that development. And then management consulting, strong demand in the energy consulting, there's some continued impact on the transactional related service. So it is a mixed bag, but end of the day by endofthequarter, it's more optimism in the in the view, we see the market, then still uncertainty in the automotive segment. Then moving over to the just saw in the industry segment portfolio. Normally, the way we present our full, we are a broad company. We don't see big changes in these segments during between quarter, but this was a quarter with driven, of course, from the big decline in the Automotive segment that relatively the Automotive segment have been shrinking within A350 portfolio went from some 9% down to 7% just in 1 quarter. At the same time, we saw growth in food and pharma stable business and infrastructure stable business in process cylinders. That means that the portfolio for AFRIC is geared even more towards infrastructure sure towards process industry, towards Energy. Of course, when we acquired Peori, bringing OAuth and Peori together, Peori coming in with process industry coming in with infrastructure and energy, already that, that company, AFib, was geared more toward that process industry and infrastructure. And then the decline of automotive in the second quarter is pushing us even more towards those segments. And of course, this is something that we are bringing into our strategic plans and we will see how we can leverage from that even more moving forward because One segment I will highlight it again, food and pharma, very interesting segment for us, not the super big segment is today, but something that we will explore more moving forward. New projects, we were assigning a lot of interesting projects during the quarter. And, I would say the order stock in general is as good now compared to 1 year back. So even though we have gone through, a rough period now, a challenging quarter. The order intake that also picked up by end of the quarter is stable. And we took some very interesting assignments during the quarter, and you can see some of them here in the slides. So, I would say that especially in Process Industry And Nadi, but also infrastructure and also the Food And Pharma segment in industry, we were able to, to, to, book some very interesting order, in Sweden but also in front, countries like the last one here, the production line for Oakland, Singapore, very interesting new contract for, for larger resources in Brazil, we took order in Pakistan in Norway and so on. So I would say that despite the uncertainty in the market, we saw actually a good order intake. Before I leave it over to to you also to talk about slide number 8 that was impacted from the Automotive segment, just a few words of what we are doing than the Automotive segment. In general, our, our kind of analyzed of the automotive business started even before the the COVID-nineteen pandemic. And if you remember, even a year back more than a year back, I would say, in beginning of 2019, we saw that, some of our automotive clients started to change the behavior and we saw some volume reductions. And that started up a process on our place to see where do we want to play in the automotive segment, especially on the R and D side because we deliver also to the automotive segment manufacturing lines. That's a fully automated manufacturing lines on their operational side. That continues as before. But if you look on where we deliver R&D services, we are now using this opportunity to really think where do we want to play? We believe that some of the professional service like business, especially on the mechanical part, in lower part of the, so some the value chain because more professional service like business, that volume have gone away during the quarter. That's part of this 40% reduction. And we will not regain all of that. And also on top of that, we don't want to fight back that volume because We see price pressure and some of that business also probably will disappear due to the shift to more electrified vehicles. So our ambition is to climb the value chain to deliver more projects, up in the value chain. That will remain smaller automotive business in the near term, but we are really having ambition to have a higher profitability and more stability into that business. That process is ongoing. And we are, of course, keeping quite good dialogue with our key clients. And step by step, we will get the position that is sustainable, in the automotive segment. So that's basically what we can say right now. So of course, now we are driven from the reactive mode from the quick, ramp down from automotive place, but we are also using that as an kind of opportunity to repositioning ourselves into automotive. So with that said, I want to leave it over to you, so we'll talk a bit about the growth in general and also how we are acting. So Yousum, please go ahead. You, Jonas. So now we're on slide 8 on the growth menu, practically, the Automotive segment. So, basically, what we can see, the total growth is minus 11 and the underlying adjusted organic growth is minus 9.8. So in between, we can see that we have had some divestment impact, then FX impact, and then slightly positive calendar meaning roughly 3 hours more compared to previous year. Our biggest biggest component in the crowd of basically decline has been the demand in the automotive where we have seen, slightly over 40% decline in revenues. As you then saw, we have been also been able to mitigate that decline with the reduction of expenses, both from project related expenses and then on the employee related expenses. And then on top of the Automotive segment, we have the repositioning of energy division where we have made a divestment earlier this year. And then we don't have the EPC cloud in the implementation phase anymore, which also reduces our expenses. So all in all, Not fully happy on the revenue development, but we have the market market situation like it is, and I'm pretty proud how have been able to react to that one. Then if we see the positive signs, we have like Jonas mentioned, food and pharma, we have positive and trusted organic growth also. Process industries and the management consulting. So from the market perspective, we have also quite good places to be in and segments that we are happy to see and note growth and continued positive activity in the market despite the pandemic we are facing in the world. Going forward to Page 9, stable result despite decline in volume. So as said earlier, basically, we have been fighting well in the cost part. And while losing SEK 600,000,000 of revenue, we have lost only SEK 100,000,000 of EBITDA. And we can deliver a solid 8% margin. That is 90 basis points below previous year. But I would say that given the circumstances, it's a good performance. We have had the automotive impacted But then on the mitigating part, we have the efficiency program. We have the, also, general cost savings when you when you have travel 3 seats all over the world. Obviously, you have certain cost buckets that that you simply don't spend in. So all in all, All of the actions taken amount 2500,000,000 in cost savings during the quarter. At the same time, we can say that from every perspective, we have solid development in infrastructure, processing, industries, and energy Also from EBITDA perspective given the circumstances. If we then go to the division of performance on slide 10. What we can see is that the biggest driver in our decline is the industry and the 2000 users. They are 69,000,000 checks down. But then we see also in other divisions impact infrastructure had 18,000,000,000 head down compared to previous year there are some impacts coming from COVID, especially in the building sector. And then we have noticed weaker per month in the Central Europe. During the quarter compared to previous year. Closes industries, I would call this one stable 4,000,000 head down. What we can say is that Basically, the CapEx part of the business is going forward. There are still new CapEx announced. They are ongoing projects and so on. And the office part of the business has been impacted, not as severely as in automotive, but also in, in industrial side of processing industry, there have been some shorter shutdowns or lower production volumes that have impacted our OpEx part of the business. Energy is the success story 4,000,000 actually up. This is not driven by the market, but I would say that it has been driven by the great performance of of the energy division and reach out, you know, re leading that one. We have been taking our reposition activities, which have positively impacted the cost structure, but also made our delivery more efficient than earlier, and that is now seen on the bottom line. Management consulting is below previous year. This is mandatory by the short short term cycle of the business then asset transactions are not happening. That has an impact both from the subsidy perspective owner. On the advisory side of the business, but then also the due diligence and seasonal type of services. So all in all, the PC impacts, we are basically going down from 4 481 to 383 But as said, I would say that it has been a positive performance from, circumstances perspective. So then go into slide 11 growth and profitability. Basically, what we can see is that we have management consulting and processing industries growing on an adjusted basis while infrastructure, minor, reduction industry and digital solution, heavy reduction driven by the automotive. And then in order to basically, they can say that we chose this type of reduction, and then we can see the positive impact on the, EBITDA margins. So all in all, I would say that in the difficult markets, we have been preparing quite well. If we then talk about my favorite topic on slide 12, it's the cash. I'm a strong believer in cash. In a weaker times, cash is your insurance and then you can use it a bit of a as a fuel to grasp opportunities in good times. It is the fuel that boost your acceleration that helps you to grow. During the second quarter, we have had really strong operating cash flow that has been pushing our net debt to EBITDA on a trusted basic 2.0. And this basically means that we are bearing 0.5 times EBITDA below our financial target, and we are solid from balance sheet perspective. When we then add up this to our unutilized credit lines, we have roughly SEK4 billion of liquidity which under the current circumstances is a very strong position to be in. How the strong operating cash flow was coming, if it's from the reduction in net working capital. So we have been successful in net working capital management, but then also fair to say that when your revenues decline, that really is net working capital. And obviously when you go back on the growth track, then you tie more net working capital and then some of this cash is spent back on the growth. But all in all, it has been a great success for us during the second quarter on securing our balance sheet and making sure that we are well equipped for whatever comes in the future. So I'm very happy with our liquidity position at the moment. Handing back over to you, Jonas. To Slide 13. Thanks a lot. You also, for that. And then I basically only have the kind of summary slide, and This is the same slide as we were presenting to you, when we closed quarter 1, and this is also the plan we are following. And If anything, we are following a plan as we were setting it out, of course, the immediate focus in the quarter end of quarter 1 and quarter 2 has been direct and adjust to the current circumstances, we had to deal with a big decline driven in automotive. We were implementing cost savings across focusing a lot on cash you can see the effect of that. And really focusing on all operational efficiency adjusting, adjusting also investments, we are happy that we have continued with the kind of important part of implementing your ERP system and these system implementations as we have informed you about before. So that is continuing. So that's been quarter 1 quarter 2, but now we are moving into the quarter 2, 3, where it's all about creating sustainable savings and also creating a lean organization. So based on the already started $120,000,000 program, that we launched even end of last year. We are now, continuing with that but also ramping up that. So everything that we have learned and seen during the 2nd quarter in the 4 term savings, etcetera, that we can transform into long term savings we are right now acting on. So we know that there's uncertainty moving also into the second half year, and we need now to see how much of the short term saving can we transform into long term savings using that $120,000,000 program as kind of the base program. So what the how can we increase our efficiency further? How can we increase flexibility? We are, of course, now reviewing our strategy and, you know, the scenarios where to play and how to win in the new normal. And as we have highlighted to you that the shift we are getting gradually into some of our core segment, we will of course see how can we gain from that even moving forward. We know that the infrastructure segment, over time, looks very interesting, of course. We have 40% close to basically 40% or the A3 portfolio, how can we accelerate our growth into that segment? We know that there will be quite a lot of public spend in that segment also moving forward. The process industry with the whole bio economy and need for sustainable packaging solutions? How can you use fiber in a more in a better way to replace plastic? That's also very interesting. The whole energy landscape. We know now that they talk even in the European Union about how can we kick start the recovery with money spending to clean energy. Of course, we are extremely well positioned into that. Everything from the high end management consulting advisory service all the way to our Execution capability into energy, is really, really interesting. And then of course, we have really interesting spot like Food And Far Mind the Industry segment, and also we are dealing with Automotive segment. So I feel kind of comfortable that also the current pandemic have fast forward a few of our strategic questions And we will, of course, use that opportunity to position ourselves into those segments that we believe will continue to grow where we really can add value because we believe that the need for sustainable solutions will increase. And then moving into in the later part of the year, as you also said, we want to be a strong company to also have a strong balance sheet that we can be offensive also when it comes to potential acquisitions down the road. So and then how can we even leverage more from a flex structures. So we have a clear ambition to be a company that really have a lean and efficient operational model We want to position ourselves even more to those attractive segments. We have a tremendous base of competent employees that also have a big heart for the A Free brand. And, then of course, key things like sustainability and digitally safe are areas that we also now will see how can we leverage further. During the quarter, besides fighting the negative, growth in some segment, we also launched effective. We have joined the 1.5 degree business playbook, how a framework, as you know, then, to reduce emissions from large corporation to even further drive the sustainability agenda. We also have launched a cooperation with gapminder. We think that's important that we will also work together with GetMinder on how to promote a more fact based view in the world. I think everybody listening in on this conference agrees to the fact that in I think it's more need now than ever that we have control of fact There are so many informations floating around about the COVID 19 crisis, about the climate crisis. I think everything we can do to let people understand what is what and what is fact. So we are joining forces with GetMinder Another thing I just want to highlight positively is that in the survey in Sweden among researchers, Afry, we'll see as the number one company where, where, researchers want to start to work at. And it was actually the Afry brand. So we are also happy that a free brand is taking off. So there have also been quite a lot of positive things during the quarter, And I also want to say that the mood in our organization is very, very good. So with that said, I will open up for, questions or comments from any of you. So with that, we open up for questions. Draw your question, you may do so by pressing 2 to cancel. And our first question comes from the line of Jan Dahl of Danske Bank. Please go ahead. Yes, good morning here. A couple of questions, please. Just can you explain a bit, Jonas, how the how the quarter progressed in terms of furloughs. I think you explained in the Q1 report, you talked about some 1600 people, how much was that, towards the end of the quarter? Yes. Yes. I would say that we were probably, we had the peak of that in the middle of the quarter also related to one basic that we got to multi players, completely closed their operation. As you remember then, all three of the big ones in Sweden, Skarnier, Woolworth Trucks and Volvo cars, all of them stopped basically the same day. So in that period, when that was basically closed, we also had a peak on the number of employees. Then it has reduced gradually through end of the quarter, but still on a higher level, but because one reason is that we are laying off people also permanent So of this 1900, as we have communicated, 200 actually are moved into permanent layoff. So that is also the activity we are doing on the automotive segment, mainly then, that we need to readjust our volume into that. And now we expect during the third quarter of course, that step by step, we need to implement long term structures that, that reduces the needle having this you know, short term work allowance structures. But sort of the end balance in terms of the short term work allowance? Where was that approximately? Just to get a feeling for where you're sort of starting in the third quarter? Well, I think maybe I was stating that if you make the So so we have stated that we have roughly a 100900 impacted out of which 200 included in that one. Have been permanently late. So we are starting the balance of 1900 employees on various kind of short short term working allowance. It's at the same time. We need to know that, the first entries have been varying. So in FTE perspective, they are slightly below that much. So we have seen the peak or short term allowance is no matter how you evaluate it in that are part of May, and now we are little while improving from that. Okay. Just on this repositioning in automotive, can you, I appreciate your analysis space. But what are the sort of potential financial effects of this? If you look at potential write downs, potential asset sales, working capital effects. Can you say anything there? Yes, I think it's, and you said we're basically you're right that we're analyzed phase, but we are also in an implementation is because as we also highlighted, SEK 23,000,000 was taken as restructuring cost for the Automotive segment. And we are reducing 200 employees mainly in the automotive. There is not so much risk into that, Johan, because what we see is that Step by step, we will then, together with our clients, find the right balance on also where we want to play because A big volume has been the kind of lower and professional service like business. And we can see now as always, when when these clients ends up in cost saving mood, the easiest thing for them immediately is to kind of reduce that kind of business where we are acting more supporting their own operations and now talk more about the R and D service. But there are projects and areas where we deliver to the clients what they cannot do themselves. And here, it's not so easy for them to easily adjust. And that's exactly what we do in, in process industry or infrastructure. So for us to find that balance will be key moving forward. We know that the volume will be less that I am prepared to bet on Of course, not 40% because 40% was the kind of hit from a short term cutting costs immediately. Now we are finding the balance, but we are not just willing to run back to every volume, we want to make sure that the automotive business that remains also for us drives value. So that's the kind of dialogue we have. So I can't guide you more right now, but, we are using the COVID-nineteen crisis to fast forward a bit our position into the Automotive segment. Maybe then to complement a bit on that one. So I thought transaction. We have a good bill valuations. You can see it from our end to our report. We have very solid headrooms in those ones, and I would not be worried on that part. I would rather take the analogy from the energy energy reposition where we are choosing where to play, how to play, and when to play. And it means that we are redirecting many of the existing resources into places where they are. They can provide higher value added But even the portfolio last year on the fixed plant, we want to, probably be a bit less on the lowest level of the lateral professional services, and that may lead into further further reduction of employees that may come at a off, but this is highly dependent on how we manage the transition, but not how how to market is operating. So there are various different variables in the reputation at the moment. All right. Just before getting back in line here, the savings you realized, I guess it was some SEK 400,000,000 in the quarter excluding these furloughs. To what extent are those, sustainable? I presume you're sort of putting the emergency break some instances, but can you elaborate on that? So you also, if you want to go ahead? Yes. Yes. I can take this 1. So so, basically, there are roughly 500,000,000 check of cost savings yesterday. It's the furlough component but then we need to, 1st of all, understand that should we have not had state subsidies. Our measures would have been the same and in a way we have trust passed on the state money to the employees. So from my perspective, the cost mitigation has been the half half a 1,000,000 But at the same time, it is coming from various different sources. We have the permanent components in there. Especially what comes to the permanent layer that you have seen in the automotive that includes both consulting and some support function employees. Then on top of that one, we have learned how a bit better how we, you know, how we can operate remotely, so just certain type of cost consciousness that are sticks quite well also going forward. And then we have taken some further actions within our efficiency So, basically, the back office administration management players that has also permanent components, but we are not getting the phase to put our finger on. That's what fully, fully, fully sticks in the future. So at the moment, out of that half a 1,000,000,000 makes you sort of 240 boys materials and products related, many of the components are still of the temporary nature. Thanks. Thank you. Our next question comes from the line of Ola Sodermark of Kepler Cheuvreux. Please go ahead. Yes. Good morning. Yeah, I think you mentioned during the call that the order backlog It's as good now as 1 year ago, driven by Infra Process Industries And Energy. Can you elaborate a little bit how the order backlog had developed, I suppose, the most order I'll catch up in the latter part of the quarter and what you are seeing in the 2 weeks that's seen here near in July when the other slowest on the month. Yeah. I mean, thanks for that question. I think in general, it was a bit of a strange quarter, of course, that, of course, in the middle of the quarter, maybe when the pandemic was peaking, especially in Sweden, that there was, of course, and uncertainty and some of this final decision were postponed a few weeks, but we felt that pretty quickly in the later part of the quarter that kind of larger CapEx projects or larger projects related to both infrastructure processing industry and NIIV, but also segments within the kind of in this to MD. The solutions division were starting to come to closure. And as you noted, maybe from the few examples, we took a few very interesting orders some interesting orders in the Food And Pharma segment. So when everything is summarized and we are getting better and better in following our order stock as more we're merging our system landscape together, the clear view we have on the order stock is that it is as strong now as we have seen 1 year back. So I don't know if you want to comment that further you, so but that's what we see right now. No. No. Basically, what you are saying is absolutely accurate, what on the timing of the order stuff, what I would I would say is that actually it has been fairly stable during April, May, June. What what we can then note on the stability is that the underlying composition of the order stock has been a bit more alive, meaning that, for example, in the industry and services, or digital solution to short term order stocks related to some of the core clients has obviously gone down while maybe the cash is related. Open has gone up and so on. So even though we, on absolute terms, pretty much on the same number, either at the end of June previous year, the composition has been a bit more alive, both among the industrial segments, but then also leading the industry our segments on what type of work is included in the orders of customers. So even though absolute numbers are same, it doesn't mean that it is exactly equal. So would you say that, quality or the mix is actually slightly better? If it's a a CapEx and, more bigger project. From many perspective, it's a co unhappy with the competition. And it is it is in a way a bit how you prefer. I always prefer to have a balance order stuff. Now we have more CapEx in there with, of course, the margin contribution perspective is quite positive, but at the same time, the OpEx part brings stability, so I prefer to see both of them. And I I can't as compliment users. If so, I agree with you, sir, but then I have to say that Of course, the volume reduction we have seen in Automotive have been challenging for us and it also impacted our profit and everything. But of course, now If you look a bit on a longer term perspective where this company is heading to use to combine knowledge and competence at A3, of course, in areas like processing industry infrastructure and the view and also related segment like for the Pharma That's where we really can play the best. And then we will also selectively play in the automotive segment where we really feel that we can make a difference. And then you could say that at least on the CapEx side, the orders that we are taking are kind of proving that the composition of A3 the former OF and former period has given us exactly what we want because many of those projects that we are now taking, we are doing thanks to the combined knowledge of the former period and former Our next question comes from the line of Dan Johansen of SEB. Please go ahead. Thank you. Good morning. 2 additional questions from me, if I may. On energy, I noticed the strong margin delivery, again, following the repositioning, is, the 9% EBITDA margin sort of nearly normal in this segment or should we still expect some volatility in the 7% to 10% is the margin corridor you talked about fairly? Thanks. Yeah, thanks. Good question. I think we have actually, even communicated through also Richard that we are targeting the corridor 8% to 10%. So obviously, 9% is pretty much in middle of that corridor. We are also having a clear strategy to also expand into this to kind of the operational service part to always balance a bit to be CapEx products. At the same time, we see a solid order backlog loss we talked about on CapEx Products. And then if you include the fact that Enbridge, the question starts to be a big thing. I mean, just look on Sweden on the themes now on the energy, the need of reinvesting into to the energy, both distribution, but also the power generation So I have a good feeling that we will be able and that's our clear ambition to stay on that corridor. And also then step by step go back to growth. So of course, you can't promise, but, we are doing this with positioning to stay in the corridor. Yes. And this is our 3rd quarter in a row in that corridor, obviously, then statistician says that 3 is not yet a trend or in the work. That's a delivering 9% all the way throughout the decade, but I said this is a very solid stock for that that for the past. Yes, great. Thanks. And last one from me on infrastructure. Did you see a support from increased public budgets already now in Q2? Or is that more of something we'll see mainly in Q4 perhaps maybe somewhat in Q3 as well, although it's a seasonally slow quarter, of course. Yes. I think, in general, if you look down the road, I think it's very promising and positive that we have seen those signals. At the same time, I think it starts to be a supply demand question that We are we also know that the infrastructure segment across the Nordics was going on pretty high pace also before the COVID-nineteen. And it's a very how to stay slow moving segments, especially on the large infrastructure projects. So maybe we will not see a big impact because it was already going high. But I think on the medium term, it is very promising and we believe that that segment will continue to have a very good underlying growth, a high demand, also because it's basically an underlying need. If you then add sustainability and digitalization as a part of that, I mean, we have talked for quite a few years now, but the transport segment starts to be heavily integrated in city solutions in city infrastructure electrification, the 5G, etcetera. So of course, with all that said, we believe also that, infrastructure will be tremendously interesting segment. And now 40% of our portfolio is geared toward that. Of course, we have no other ambition than to be even stronger fighter and gain market fares in that segment. We believe that we have that kind of industrial heritage to be a kind of a good challenge, sir, to even be bigger in infrastructure. And then basically, if we just take your number the moment, there's lots of police discussion, lots of talks, what if we take order stock or we take the number, request for proposal, of the stable request for proposal are somewhat stable, maybe a bit in clients, maybe a bit in increasing modes, but at the same time, there's volatility between countries and between sectors for transportation, for example, what but good at the moment, especially in Nordics. But in my experience, it takes still a further while from talk to repur for proposals and from repur for proposals to actual orders. So let's see. Very clear. Thank you. Maybe last one, if I may. I mean, you talked about the strong liquidity position you have and you had quite good improvements in net working capital, though. I think if I calculate correctly around SEK 4,200,000,000 in cash and credit lines now available, are you getting sort of eager to use it, or will it still be more of safe regarding your operations now going into H2? Or could we perhaps see some smaller M and A coming up here during the fall? I think Of course, as you also said, then you can complement that user, but we are having a clear ambition to be an offensive player. We know that acquisition has been part of the game is part of the game. So for sure, step by step, when we see a stability, we will be we will be very open to, good acquisitions. But of course, right now, as you all know, there is a big uncertainty. What will happen in the second half year? It's very much depending on how the pandemic will develop, of course. I feel that having 75% of our business in the Nordics. Of course, in the way, I would say, even including Sweden have handled the pandemic, If you take Norway Denmark, Finland, Finland, Sweden, it feels like there is a kind of a control, even though Swedes are not that welcoming some countries, I think still that the market seems stable. But let's see. So I think before we are seeing that we have a clear stability, we are happy that we can continue to strengthen the balance sheet. I don't know you will see if you want to add on to that. No. I think that's the the that's fully fully matches how I feel and what we've been talking about. Bay basically, what I may may ask you, though, is that I highly admire how all I find in this other or most as a great Swedish company reacting after financial crisis. And accelerated heavily starting maybe from 2009, 2010. And that is obviously something that our balance sheet is wrong to and we would be happy to see the opportunities. But, at the same time, I would not be happy to overly overly rush in. There needs to be a good opportunity and then we have benefits react to that. That's basically how it works from my perspective. Okay. Thank you. That was it for me. Thank you. Our next question comes from the line of Eric Elander of Handelsbanken Please go ahead. Yes. Hello. Hello. So one question for me, Dan. You talk about the different market conditions in, in the Nordics and also in the, Central European market in relation to the infrastructure segment. I mean, first of all, what's the difference is? And second of all, how big is the infrastructure business actually for Afi in Central Europe compared to the Nordic I. E. Percentage wise in terms of sales. That's my 2 questions. Yes. I mean, I think, thanks for those questions here. Rick, I think And the way you perform is always a kind of consequence how you are positioned also. We know that in Sweden and then the kind of Nordic that we are strong and through acquisitions, we have gained a strong competence in Norway, for example, on product management through our Advancia business. And we are also having stronger strong position in Denmark. And of course, with the acquisition of Peru, strong position in Finland. Now through, all to Skano that we acquired a few years back and also joining forces with 3 d, we have an also very interesting infra business in, for example, suite and related countries. But I would say if you look on the kind of volume and performance, we are, of course, having a longer legacy in Sweden and the Nordics. So I think that also answers a bit that, that, if you talk about position, then, And then in relation to, I don't think you also do have those numbers in the head about the split, in the Central Europe on infrastructure? We have roughly 1 quarter out of intradivision sales out of Nordics, roughly 1 quarter. So that's in a better balance. And then we have we have 2 different components in the market. Such isolated events, but also then they also enforced projects like the events, from those are compensation perspective. I will be 3 Switzerland where we have, both transportation and buildings, also some ports and the environment in Terrible buildings have been quite heavy. Heavy in there, and then we have the Germany and all three are components and checks operations, of course, on the input side. But the compositions are slightly different and different reshapes have been reacting differently, but then also different countries have had different impacts during the pandemic. So all of these ones combined and then adding to the fact that already from per return enter your report below portfolio within the interest profitability. Those add up now in the second quarter on Central Europe being behind, behind compared to previous year. So I think Eric also the fact that we are in that expect relatively new then since it was only, not so long ago since we were actually combining OAuth and Puri especially on the infra side. So I would say that, of course, you can always wish for more when it comes to performance. But I can promise you that a lot time, it's now spent to see how can we actually gear up to operations in Central Europe, but also in the Nordic when it comes to infrastructure. But of course, as a company, A3, we are we only have a bit more than a year younger together. And the portfolio looks a bit different in Central Europe, than it does in the Nordic. But, I promise you that we are spending some time on how can we further improve that. Right. So just to follow-up on that because I know that we we talked about this for, and you mentioned, I thought it seemed to work in Q1. You mentioned that you're not losing market share in infrastructure in Sweden in the Nordics, which I that you don't do because you have a very strong position, as you mentioned. But then the central European market must be very, very weak since the infrastructure segment actually grew organically by about minus 1%. How will it is it actually? Well, I will say that it's very, very weak. For sure, as you also said, Switzerland, I think we have a strong position in Switzerland, especially, on some of the rail and road business but also promising and in the billing side. Then of course, if you look on Germany and Austria and some of the countries are on, we are still a smaller player. So there we need. And as you also said, there's a legacy of maybe not having always the super strong performance. And here we are step by step getting our operation up and running in the removed, but I would not say, as you said, it's very, very weak, but that's your statement. But, for 4, we want to do more, and, that's what we are looking for. Yes. Yes. I would exactly agree with what Jonas is saying. And then just a slight correction, we have actually slightly below 20% in the Central European market side. Quickly in the Exelomated 1 of the fine Nordic countries and transfer that I apologize for that one. So slightly below 20%. I want to add the point that, just so we understand where we are coming from, Aifree and then OAuth Perry. If you go back 10 years, we were a small player or basically really small player in infrastructure because the OS legacy and the goes back on the industrial side. Then step by step, we were building up, I would say, challenging position, challenger position in Sweden, taking a strong position. And then over the last years, we have been growing in the Nordic with acquisitions in Norway, in Denmark, one in Switzerland and then also joining forces with Perin. So of course, we are in some of these relatively newer in the infrastructure on large scale operations. So if you consider that, that we are then, I would say that Of course, we always want to have more, but I feel extremely confident that we will step by step improve performance also in Central Europe and take market shares in the Nordics. Okay. Thank you both. It's very clear, only around certain specifications. So I just want to wish you a great number. Thank you, Eric. And the same to you. Thanks a lot. Thank And there are no further questions. Please go ahead speakers. Okay. Then I really would like to, thank everybody for participating today in the call. And I would like to remind you that you're all very much welcome to a planned Capital Markets Day on November 24. Of course, our ambition is to have that a physical meeting But, you never know, but November 24, you can make a small, reminder in your calendar. And with all that said, I really wish all of you a great summer and stay safe and looking forward to meet you either digitally or physically after the summer. Thanks a lot and have a nice summer.